Gold Slides as Fed Tightening Bets Lift Dollar

Gold prices declined on Wednesday as investors anticipated further interest rate hikes from the Federal Reserve, boosting the US Dollar. The precious metal's value dropped by 1.20% to around $4,305 in US hours, with the Dollar Index (DXY) reaching a two-month high of 100.96. Despite lower oil prices, the Dollar's advance persisted.

The Fed raised rates by 25 basis points last week, taking the federal funds rate to 3.75%, 4.00%, and reiterating its 2% inflation goal. Projections indicate one more hike this year, with a 53% probability of an October increase, according to the CME FedWatch Tool.

Technically, XAU/USD is testing the lower Bollinger Band support near $4,304. The 20-period Simple Moving Average (SMA) stands at $4,350 as first resistance, with further levels at $4,395 and $4,450. Historically, gold has struggled when real yields rise, and today's 2-year Treasury yield of 4.79% creates a restrictive environment for non-yielding assets.